Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

A Member of the Law Professor Blogs Network

Monday, April 27, 2015

State Bar Judge Rules To Disbar Lawyer for Misappropriation

Gavel 3When Michael Scott Keck removed $55,000 from the trust fund of a client who was in prison in order to repay a debt to another client, the bar suspended him from practice.  Now, a State Bar Court judge has recommended that a San Francisco attorney be disbarred.  Keck has practiced law since 1986 and had no prior record of misconduct. 

At the disciplinary trial, Keck testified that the fund’s previous financial advisor authorized him to borrow the money in the trust.  However, that testimony lacked credibility since an attorney should know that the adviser would not have the authority to allow a loan from trust assets.  Keck was “dishonest, concealed material facts from [his client] and others, and acted in bad faith,” the judge said in regards to Keck’s case.  Despite Keck’s good record in his practice of law, the judge said misappropriating a client’s funds is grounds four disbarment.

See Bob Egelko, State Bar Court Judge Rules to Disbar S.F. Lawyer for Taking Funds, SF Gate, Apr. 24, 2015.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

April 27, 2015 in Estate Planning - Generally, Malpractice, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Friday, April 24, 2015

Family Files Suit Against Attorney Reaping Millions From Will

Gavel2When Robert Mardigian wanted to put his financial affairs in order, he turned to his longtime friend and attorney, Mark Papazian.  Mr. Papazian subsequently drafted a will and trust that left the bulk of Mardigian’s fortune to Papazian and his two children. 

Yet, because Mardigian was unrelated to Papazian, the will was improper under the Michigan Rules of Professional Conduct, making clear that attorneys “shall not” prepare a will for a non-related client that includes a substantial gift for the attorney.

Now, Mardigian’s survivors are seeking that the gifts to Papazian and his children be disallowed.  A county judge ruled in their favor, and the case is now before the Michigan Court of Appeals.  “For over 100 years, the Supreme Court has ‘bluntly warned’ lawyers not to receive gifts from clients under wills they themselves have drafted.  Mark Papazian did it anyway . . . in flagrant disregard of his ethical duties as a member of the bar,” Gerald Gleeson, an attorney for Mardigian’s brother stated in a court filing. 

See Paul Egan, Family Fights Attorney Getting Millions From Client’s Will, Detroit Free Press, Apr. 11, 2015.

Special thanks to Jim Hartnett (Hartnett Law Firm) for bringing this article to my attention.

April 24, 2015 in Estate Administration, Estate Planning - Generally, Professional Responsibility, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 22, 2015

Attorney Sentenced for Probate Theft

Gavel 3Seventy-year-old Arizona attorney Rodney Matheson was found guilty on charges of theft and fraud for stealing money from his deceased clients’ probate accounts.  Maricopa County Superior Court Judge Bruce R. Cohen sentenced Matheson to 2 ½ years in prison and also ordered Matheson repay more than $1 million to an attorney representing the Mayo Clinic.  Cohen placed Matheson on probation on a fraudulent schemes conviction for seven years, which will begin once he is released from prison. 

According to court documents, Matheson orchestrated an elaborate “shell game” by stealing money from several estates in order to satisfy a court order for payment of $800,000 to the Mayo Clinic, the major beneficiary of a third estate.  The fraud was uncovered when the Mayo Clinic filed a civil suit to collect $1.2 million left to the hospital as a beneficiary by the Mary Jane Schalow Trust.

See Disbarred East Valley Attorney Sentenced to Prison in Probate Theft Case, AZ Central, Apr. 21, 2015. 

April 22, 2015 in Estate Planning - Generally, Malpractice, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, April 16, 2015

Proposed Regulations Protect Retirement Accounts

IRA 2On Tuesday, Federal regulators proposed rules to provide expanded customer protection for retirement savings.  The rules, which were proposed by the Labor Department, are part of the Obama administration’s effort to help the middle class. 

If enacted, the rules would eliminate some of the loopholes allowing brokers to avoid acting as fiduciaries when providing advice on retirement money held inside accounts such as 401(k)s and IRAs, which hold approximately $7 trillion.  The new rules would update ERISA, which was enacted in 1974. 

It is expected that the effort will save investors $40 billion over ten years.  “We want to make sure people get put into products that work best for them,” says the secretary of labor Thomas Perez.  “We have met too many people who have worked their tails off for retirement, they had barely enough saved to begin with, and then they were steered into a product that was unduly complex.”

See Tara Siegel Bernard, U.S. Plans Stiffer Rules Protecting Retiree Cash, The New York Times, Apr. 14, 2015.

Special thanks to Lewis Saret for bringing this article to my attention.

April 16, 2015 in Estate Planning - Generally, Non-Probate Assets, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 14, 2015

California Court Recognizes Attorney Duty to Trust Beneficiaries

Gavel BWWhen Gilbert Paul had his revocable living trust amended by attorney Richard Patton, he intended for his children and not his wife to be granted an interest in his brokerage accounts, and real and personal property. However, the trust erroneously left equal shares to Paul's children and wife. His children settled with Paul's wife and then sued the drafting attorney for professional negligence. The trial court refused to allow the children to amend their complaint to add the missing allegation that Patton owed them a duty, because the court reasoned they could not be owed a duty as trust beneficiaries.

In Paul v. Patton a California court of appeals reversed and found that an attorney does owe a duty to beneficiaries when the testator clearly intended them to benefit. The children now have the chance to amend their complaint.

See Attorney Can Owe Duty of Care to Trust Beneficiary, Elder Law Answers, Apr. 13, 2015.

April 14, 2015 in Estate Planning - Generally, Non-Probate Assets, Professional Responsibility, Trusts | Permalink | Comments (0) | TrackBack (0)

Sunday, April 12, 2015

Elder Law Attorney Sentenced to Prison in Theft Conspiracy Case

Gavel2As I have previously discussed,  New Jersey attorney Barbara Lieberman plead guilty last year for her participation in a scheme that involved taking advantage of elderly clients by fraudulently gaining power of attorney and stealing millions of dollars from the victims. Lieberman has been sentenced to 10 years in prison, which was the recommended sentence by state prosecutors. Lieberman agreed to testify against her alleged co-conspirators as part of her plea deal, and five alleged co-conspirators have been indicted.

See N.J. Elder Law Attorney Gets 10 Years for Role in Swindling Elderly Clients, Elder Law Answers, Apr. 9, 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

April 12, 2015 in Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 8, 2015

Nevada Supreme Court's Fraudulent Transfer Ruling

Gavel 3The Supreme Court of Nevada recently held that the law firm, Woods & Erickson, LLP, was not liable for the fraudulent transfer of assets belonging to a debtor who was dodging a creditor judgment.  The court opinion noted that a “majority of jurisdictions do not recognize accessory liability for fraudulent transfers.”  The rationale is to protect attorneys who are not parties to the transfer but are instead acting as a “mere scrivener,” which contrasts with someone who knowingly assists with a fraudulent transfer and could be held liable. 

Attorneys should follow the principle of KYC (know your client), because litigating these types of cases can be costly and time consuming.  Even if not held liable, attorneys cannot recoup attorney fees for fighting these actions and malpractice insurers do not cover these types of cases.  Because clients often lie about themselves, attorneys should diligently research a potential client to avoid any problems that could arise. 

See Jay Adkisson, Nevada Supreme Court's Fraudulent Transfer Ruling Keeps Innocent Law Firm Out Of The Woods, Forbes, April 02, 2015. 

April 8, 2015 in Estate Planning - Generally, Malpractice, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Saturday, April 4, 2015

Article on Fiduciary Governance

Paul MillerPaul B. Miller (McGill University Faculty of Law) & Andrew S. Gold (DePaul University - College of Law) recently published an article entitled, Fiduciary Governance, 57 William & Mary Law Review No. 2, 2015. Provided below is the abstract from SSRN:

The fiduciary relationship is one of the most fundamental legal relationships, and its importance for both public and private law is increasingly recognized. Fiduciary mandates typically involve one person – the fiduciary – administering the affairs or property of other persons – an individual beneficiary, or group of beneficiaries. Yet, as we will demonstrate, this is not the only way fiduciary relationships are structured. Most accounts of fiduciary law oversimplify the law because they exclude a categorically different form of fiduciary relationship. A significant set of fiduciary relationships feature governance mandates in which the fiduciary is charged with pursuing abstract purposes rather than the interests of persons. Indeed, many public and private fiduciary institutions are best understood as being administered on the basis of governance mandates, rendering moot longstanding debates over specification of beneficiaries and requirements of loyalty. The resulting account provides important new insights for core issues in corporate law, administrative law, and constitutional law, among other fields.

April 4, 2015 in Articles, Estate Administration, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Friday, April 3, 2015

Attorney Charged With Wire Fraud

Wire fraud

Gerald Cooper, an 84-year-old Cleveland attorney, has been charged with wire fraud for stealing $115,000 from the estate of his client, Henry Luke.  Cooper wrote a series of checks and subsequently used the money to pay credit card bills, purchase sports tickets, and make his mortgage payments. 

Cooper’s attorney says his client is working to pay all of the money back.  “He had an outstanding and remarkable career as a lawyer.  It is unfortunate that this final moment of his practice is kind of a dark mark on his reputation,” his attorney commented. 

See Erik Heisig, Longtime Cleveland Attorney Charged With Stealing $115,000 from Estate, Cleveland.com, Apr. 1, 2015.

April 3, 2015 in Estate Administration, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 1, 2015

Estate Planner Accused of Deceiving Family After Losing Will

Gavel2An estate planning lawyer in New York has plead not guilty to charges of possessing a forged instrument and offering a false instrument for filing. The lawyer is accused lying to the family of his late client after he could not find the man's will. The lawyer did not receive any financial gain from allegedly deceiving the family.

See Mark Hansen, New York Lawyer Charged for Allegedly Deceiving Family Over Misplaced Will, ABA Journal, March 27, 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

April 1, 2015 in Estate Administration, Estate Planning - Generally, Professional Responsibility, Wills | Permalink | Comments (0) | TrackBack (0)